World stocks hold near 16-month highs after strong week

World stocks held near 16-month highs on Friday, set for a strong weekly gain, while the euro fell further after the European Central Bank’s decision to extend its stimulus program. The MSCI World index .WORLD was up 0.2 percent, on track for a gain of 2.7 percent for the week. The index was less than 0.1 percent below Thursday's peak, which was its highest level since August 2015.

On Wall Street, U.S. futures were flat. European shares hit their highest level for 11 months, and were set for their best week since February, following the ECB's decision to trim the size of its bond-buying program while also extending it for longer than many analysts had expected. The ECB said it would reduce its monthly asset buys to 60 billion euros ($63.7 billion) as of April, from the current 80 billion euros, and extend purchases to December from March - three months longer than some analysts had forecast. That dragged down two-year yields across Europe and sharply steepened the yield curve, a gift for banks that typically borrow short maturities and lend long. European bank stocks .SX7P pulled back on Friday, dropping 0.5 percent, but were still up nearly 10 percent for the week, with the sector set for its biggest weekly rise since December 2011. One month on from November's U.S. presidential election, world stocks have gained nearly 4 percent, with Wall Street spurred to all time highs on hopes of higher growth and inflation as a result of President-elect Donald Trump's planned fiscal stimulus. Analysts said that signs the ECB would continue to provide monetary support for as long as needed complemented the promise of fiscal stimulus, in a welcome cocktail for investors. "Markets already excited by the prospect of a fiscal stimulus wave via a Trump election look in line to get more of both fiscal and monetary stimulus from next year," said Mike van Dulken, head of research at Accendo Markets. "(That's) the best of both worlds for investors." 

In all, Europe's STOXX 600 was up 0.6 percent. The euro dipped for a second day, after Thursday's ECB announcement drove its biggest daily loss against the dollar since Britain's vote to leave the European Union in June. Read more